Arbitrage Q&A with Arbitao

What is Arbitrage Trading?

Arbitrage trading exploits price differences on the open market by taking advantage of inefficiencies in the marketplace to generate profit. Essentially, it means buying a security on one exchange, and simultaneously selling it on another exchange for a higher price. This technique involves nearly if not entirely no risk for the trader. These trades are conducted almost instantaneously, doing away with any probability that the price on the higher priced market will fall below the price on the lower market. It thus requires sophisticated algorithms both to monitor for these price discrepancies and to execute the trades. As a result of this quick turnaround and computerized monitoring, most of these opportunities are eliminated within a matter of seconds.

This results from normal market forces as the price is driven up on the cheaper market and down on the more expensive one. Therefore, in addition to providing a profit opportunity, arbitrage plays an important role in making sure that markets remain as efficient as possible by ensuring that prices for the same stock don’t drift too far apart on different exchanges. Arbitrage is a necessary force in financial markets, so even for the more squeamish, first time investor worried about “making something out of nothing,” arbitrage serves as a compliment to more traditional securities trading. The profits from arbitrage can be considered a kind of indirect compensation for improving market efficiency. Lastly, arbitrage works even with tiny variations in price, so even when markets are going down, arbitrage still allows investors to make profits. In the volatile crypto market, the importance of this fact cannot be overstated.

How Does it Work in Practice?

Consider this by way of example. At a given time, stock of a Company X is being traded on both the London and the New York Stock Exchanges at a price of 100.05 USD in New York and at 100 USD in London. Arbitrage takes advantage of this short-term discrepancy to buy shares in London while simultaneously selling them for a 5 cent profit per share in New York. A trade for just 5,000 shares nets an immediate profit of 250 USD. Conduct similar trades several times a second for the six and a half hour trading day and it is easy to see where the profits comes from. This isn’t a “too good to be true” story. The example just described happened when the market opened in New York on June 7th, 2018. Microsoft shares were priced at 102.65 USD in New York and 102.60 USD in London. This difference only allows for a small profit on each share, but a larger profit will be made the more shares are bought and sold.

What Does Arbitrage Look Like With Cryptocurrencies?

Because the crypto market is so young, there are many more arbitrage opportunities than in a traditional market. This is great for arbitrage investors because there are much better profit opportunities, but the risk remains tiny for both traders and investors. And, as in traditional securities exchanges, we contribute to making the crypto market more efficient and less volatile. We take advantage of spreads in the crypto market on different exchanges. These spreads occur frequently, but sometimes they differ a lot more than others. For example, on June 7th at 16:37 GMT the price of 1 BTC was 7,695.21 USD on Bitfinex but only 7,682.00 USD on Bitstamp. This is a noticeable, but still small difference in price. However, for a few moments on April 11th, the spread was much larger, a difference of 107.97 USD between Exmo and Bitfinex. A transaction of just 25 bitcoins purchased on Bitfinex and sold on Exmo thus would have made an immediate profit of 2,699.25 USD.

Successful arbitrage trading in the crypto market takes three things: high liquidity, a complete, specialized software to identify and execute trades, and a global infrastructure to ensure those trades are made quickly. Arbitao offers all three. We monitor dozens of exchanges, increasing the amount of liquidity in markets we monitor and trade on. Our product is one-of-a-kind and works faster than any of our competitors. And we have offices on three continents, reducing latency and ensuring our service works for you around the clock. And, we offer all of this without the barriers that normally stop people from investing in financial and crypto markets.

How is Arbitao Different?

Arbitao is quite simply better than our competition. First, we offer everyone the opportunity to use arbitrage, without the need for a big bank trading on a supercomputer or for huge amounts of starting capital. You can invest with Arbitao for as little as 100 USD. Second, Arbitao already has a working product making steady profits which deftly exploits these market inefficiencies quicker than the competition. Most investors in the crypto market are investing in an idea, for a new coin, exchange, etc. Very few of these ever come to fruition. But with Arbitao, you will be investing in a tested, proven product. Profits are paid out to investors daily, and secured as USD for stable profits, unaffected by the volatility of the crypto marketplace.

Arbitao’s decentralized blockchain network is one-of-a-kind and allows even small investors to profit from arbitrage trading, even when markets are crashing. By bringing together the capital and personal computing power of each member of the Arbitao community, we are running a super-fast trading network that executes profitable trades faster than any competitor. And with cryptocurrencies’ penchant for volatility and rapid trading pace, it is vital that these trades are made quickly. Arbitao’s product ensures that these trades are made and the profit goes back to the investors. You can even log on to Arbitao’s dashboard and see the trades live as they happen!

If you want low risk, stable, and reliable profits, then Arbitao is for you. Our unique product is unmatched in the world today. You’re not just investing in an idea, unfulfilled and vacuous at best, or the latest fad coin, likely to fail like so many others, you’re investing in a proven strategy, a dedicated team, and a piece of the future of crypto markets. All that’s left is for you to open up your laptop, log on, and seize the opportunity.